Delaware Series LLC in California, Florida, and New York

A Delaware Series LLC, commonly referred to as an “SLLC,” is one LLC that is legally authorized to create separate portfolios of assets and liabilities (the individual “series”) that are not separate LLCs. Each series is protected from claims of both the series LLC itself and other individual series formed by the SLLC.

The basic rules for creating and running an SLLC are:

• The limited liability company agreement must provide for the establishment of 1 or more designated series.
• A notice of the limitation on liabilities of a series must be in the certificate of formation of the limited liability company and must provide that the liabilities of the series shall be enforceable against the assets of the series only, and not against the assets of the limited liability company generally or any other series.
• Any series may have separate rights, powers or duties as to property, liabilities, profits, and losses.
• A series agreement establishes each separate series.
• The business records must account for each series separately and reasonably identify the assets and the allocational formula or procedure (including a percentage or share of any asset or assets) or by any other method where the identity of such assets is objectively determinable.

Florida, California, and New York do not provide for the creation of SLLCs so a Delaware LLC is created to do business in these states.  DC has adopted the SLLC.  In Florida, an individual series of a Delaware SLLC may purchase and sell real estate in the name of the individual series. 

The SLLC isolates liabilities of single assets without requiring a separate LLC for each asset. There is one LLC, one Delaware filing, and for sole member SLLCs the federal income tax filing remains on the personal return as disregarded entities. Delaware SLLCs are perfect for portfolios of rental real estate and charter yachts.

Even when only purchasing one parcel of real estate, if an the SLLC is formed and used, all that is needed to purchase a second parcel is a short off-record series agreement creating the new series and identifying the new parcel.  There is no required state filing or other process to create each series once the SLLC is formed.

If this sounds like it may work for you, please contact Donald J. Schutz.